Abstract
This 6-page, 1980 R.J. Reynolds marketing report analyzes smoking patterns among teenage smokers ages 14-17. While it studies this group's smoking habits in depth, the report states that it is to be used to "forecast future trends" but is "not designed to be used as a tool for developing marketing strategies for this population group." Here is the entire quote from the document:
"Many adult smokers have already formed consistent smoking patterns by the time they enter the adult market at age 18. To improve our ability to forecast future trends, this report examines the demographics and smoking behavior of 14-17 year old smokers. It is not designed to be used as a tool for developing marketing strategies for this population group."
Nevertheless, the report quantifies what share of the 14-17 year old market RJR and its rivals enjoy, and points out the runaway success of Philip Morris enjoys among this market saying,
"It is worth noting that the five key brands represent over 80% of the market for 14-17 year old smokers. Marlboro alone accounts for 50%."
The importance of the 14-17 year old market is made clear by the document's definition of "franchise aging," which refers to the rates at which young smokers enter the market and older smokers 50+ "leave the market," presumably by quitting or dying.
Fields
- Quotes
Many adult smokers have already formed consistent smoking patterns by the time they enter the market at age 18. To improve our ability to forecast future trends, this report examines the demographics of smoking behavior to 14-17 year old smokers. It is not designed to be used as a tool for developing marketing strategies for this population group.
The analysis is divided into three sections:
--Demographic description of 14-17 year old smokers - population incidence, rate, effect on share.
--Share of RJR and competitors among the age group. Included is the net effect of aging on company franchises.
--Future trends.
...Key Findings:
--Teenagers (14-17 years old) have decreased from 5.5% of the total smokign population in 1975 to 3.6% in 1979. Furthermore, because their smoking incidence and rate per day are lower than adults, their share of total volune has decreased from 3.14 in 1975 to 2.0 in 1979. This decline is a result ofchanges in incidence and population.
--Smoking incidence among teenagers declined from 17% in 1975 to 12% in 1979. This represents a decline of 31% for teenagers compared to approximately a 2% decline for smokers.
--The number of 14-17year olds declined from 16.9 million in 1975 to 16.3 million in 1979...
--The rate per day among teenagers increased only slightly during the four year period...
- Company
- R.J. Reynolds
- Author
- Frydman, Uziel (RJR Marketing Research Dept.)
- Recipient
- R.J. Reynolds
- Region
- United States
- Litigation
- Mangini
- Type
- Memo
- Report
- Subject
- smoking initiation
- Target/Youth (pre-18) (Target Groups)
- target market
Document Images
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February 1, 1980
Mr. Uziel Frydman
RE: TEENAGE SMOKERS (14-17) AND NEW ADULT SMOKERS
AND QUITTERS
Preamble
The data analyzed in this report was obtai~d from National
Family Opinion, Inc. (NFO) of Toledo, Ohio which maintains a
panel of consumers for the purpose of conducting consumer sur-
veys. For the past 15 years RJR has used NFO for product
testing and for regularly tracking smoker profile and switching
information. The data regard'ng teenagers, new smokers and
quitt-ers is a natural by-prouict of the tracking of adult smokers.
A. SMOKING AMONG THE 14-17 AGE GROUP
Many adult smokers have already formed consistent smoking patterns
by the time they enter the market at age 18. To improve our
ability to forecast future trends, this report examines the demo-
graphics and smoking behavior fo 14-17 year old smokers. It is
not designed to be used as a tool for developing marketing strate-
g es or is population group.
The analysis is divided into three sections: - -
Demographic description of 14-17 year old smokers
population, incidence, rate, effect on share.
'Share of RJR and competitors among the age group.
Included is the net effect of aging on company
franchises.
Future trends.
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Mr. U. Frydman
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February 1, 1980
TEENAGE SMOKING
1. The Teena e(14-17 ade group) Market
TABLE I
Summary of Demographic Data *
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1975 1979 Change 1975 1979 Change
Incidence
MALES FEMALF.S TOTAL
8.3 - 3.48
~ of Smokers
(Millions) 1.5 .9~
9 of Total
Smoking Population 2.8 1.7
Rate/Day 18.9 19.1
Volume
(Billions) 10.2 6.1
Share of Market 1.7 1.0
8.3
8.0
3.6%
-24.7
; 41.0 , 1.4 1 1.0 )-28.6
-39.3 2.7 1.9 -29. 6
+ 1.1 15.6 1 6.4 ± 5.1
~ . -
-40.2 8.3 6.1 -26.5
-41.2 1.4 1.0 -28.6
$ ?.
1975 1979 Chan e,
16.9 16.3 - 5.6?1~
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17.2 11.9 -30.8 ~, .
~
2.9 1.9 -34.5 5'
5.5 3.6 -34 . 5~ r
~
17.2 17.7 + 2.5
18.5 12.2 -34.1
3.1 2.0 -35.4 1
* Sources: Population: U. S. Census Projections
Incidence: HEW estimates. 1979 estimates from
April 28, 1979 New York Times quoting
unpublished HEW report.
Rate/Day: Adjusted NFO.
Key Findings:
. Teenagers (14-17 year old) have decreased from 5.5% of the total
smoking population in 1975 to 3.6% in 1979. Furthermore,
because their smoking incidence and rate per day are lower than
adults, their share of total volume has decreased from 3.14 in
1975 to 2.0 in 1979; This decline is a result of changes in
incidence and population.
. Smoking incidence among teenagers declined from 17% in 1975 to
12% in 1979. This represents a decline of 31% for teenagers
compared to approximtely a 2% decline for adult smokers.
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Mr. U. Frydman
Page Three
February 1, 1980
. The number of 14-17 year olds declincd from 16.9 million in
1975 to 16.3 million in 1979 for a net decrease of 3.6% in
four years.
. The rate per day among teenagers increased only slightly
during the four year period. Males increased from 18.9/day
to 19.1/day, while females increased from 15.6 to 16.4.
2a. Share of Companies and Key Br3nds Among 14-17 Year Old
' Smokers
i
__ T11BLE I I _.
Share Among~l4-17~Age Group ~and Estimate~3~
of Total Industry'Volume
- Share Among 14-17 % of Total Industry Volum._' ~
(Share Points)
,
1975
-
I
r RJR 29.9
t
~
WINSTON
12.5
.
~ SALEM 10.6
~
P. Morris 39.6
Marlboro 36.1
:
~ American 1.2
~
~ B & W 22
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#
Kool .
19.8
~ P. Lorillard 7.3
# Newport 4.3
Liggett 1.3
- Total Share
Points
Total of Five
83.1
Brands
1979
-- --
21.3
8.5
10.6
58.8
50.3
.3
8.8
" 82.1
* Source: NFO Estimates.
1975 1979
.88 -- -- 43
.40 .16
.33 .21
1.25 1.18
1.14 1.01
:04 .01
.70 .18
.63 .13
.23 .19 ; .;
.14 .13
:04 .02
3:14 2.00
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Mr. U. Fryd,:,an
Page Four
February 1, 1980
Key Findings:
RJR's share of teenager smokers has declined from 29.9 in
1975 to 21.3 in 1979. In 1975 this represented .88% of
totalindustry volume compared with .43% in 1979. This
decreasing trend was felt largely by the WINSTON brand
family.
The share of teenagers smokers who smokes P. :iorris hranc3;;
has increased from 39% to 58% in the four year period.
P. Morris' increased share is primarily due to teenager
smokers strong preference for Marlboro. P. Morris realizes
over one share point from purchases by teenage smokers.
Brown and Williamson's share among 14-17 year olds has
dropped from 22 to 8.8. In 1975, teenagers generated .7
share-points for B&W, compared with .18 in 1979. Kool's
sales losses are the primary reason for B&W's decline.
P. Lorillard is the only other company beside P. Mocris,
to have increased sales amng 4-17 year olds during 1975-
1979. This is largely due to Newport.
American Tobacco Company and Liggett are eclining in share
among 14-17 year olds. They are basically now inconsequential
factors in the 14-17 year old market.
It is worth noting.,that the five key brands represent over 80%
of ~fienarket for 14' ~d 7 year old smokers. Marlboro alone accounts
C _~I Cnn 1 .F+
LVLI 7uSb %
i
2b. Franchise R
Franchise Aging is the dynamic process of young adult smokers (18
year old) entering the smoking population and older smokers (50+)
leaving the market. For example, in 1979 approximately one milliorn
smokers became 18 years old while approximately 450,000 older
smokers left the market. The extent that each company is affected
by this process is determined by the age skew of its franc.hise.
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Mr. U. Frydman
Page Five
February 1, 1980
TABLE III
Net Effect of Aging
RJR
WINSTON
SALEM
P. Morris
Marlboro
:.mer ic.an
B&W
Kool
P. Lorillard
Newport
Liggett
Source:
1975 1979
Share 1lmonq Share 11mvn
Share Point Share Poi::'
18 50+ Shift 18 `'10+ Shift ___
28 33.3 - .06 25 33.3
12.8 11.2 .00 9.0 9.6 - .03
10.5 8.1 .04 11.2 9.3 .02
44 15.3 .40 56 15.7 .46
34.6 5.0 .40 46.5 3.8 .51
1.4 17.7 - .22 .3 17.9 - .21
18 12.5 .06 7 12.9 - .07
18.8 4.2 .20 7.7 3.8 .0.:
8 12.3 -.03 11 12.3 0
3.5 .6 .03 6.6 .3 .07
.6 7.5 - .06 .7 6.6 - .66
Share estimates based on NFO data. Share among 18 year olds
estimated by trending share among 14-17 to 18-20.
Key Findings:
10 share points in 1979 due to the aging process. Thi.
P
.
JR lost
.
family accounts for all P. Morris' aging gains.
B & W has lost considerable share among young adult smokers.
As a result they now suffer a net loss due to aging. Kool's
share of young adult smokers has declined significantly.
is up from .06 in 1975. This is primarily due to losing share
among young adult smokers while holding steady among the 50+
age group. Both WINSTON and SALDi have shown slight declines
in share_gains for aging.
P. Morris realized nearly .5 share points from aging in 1$79.
Young adult amokers' strong preference for its brands, coupled
with its underdevelopment in the older smoker category make it
the prime beneficiary of the aging process. 'The Marlboro brand
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Mr. U. Frydman
Page Six
February 1, 1980
P. Lorillard has moved into an equilibrium position with
regard to aging. Their trend is up, however, and it is
expected that they soon will begin to benefit from aging.
The gains from aging for Newport have slightly increased.
ATC and Liggett both are losing points due to the aging
process. Their concentration in non-filter brands is
reflected in their relative older age skew.
3. Future Trends
o The 14-17 year old smoking population will become increasingly
less important in the future. This is due to two factors:
a) The decreasing size of this age group. As we move
further away from the "baby boom" years of 1945-1960
and the birth rate continues to decline, this age
group will represent a continually smaller segment of
the population.
b) The .3ecrease*in smoking incidence among teenagers.
While the rate of decline from 17% to 12% between
1975 and 1979 is unlikely to continue, the general
trend is still towards decreasing incidence.
o While decreasing in size, young adult smokers will still
affect company share. Gains and losses will still be
realized from the aging process.
1) P. Morris, because of its increasing share among
this segment, will realize an increasingly larger
share of a smaller pie. While P. Morris' growth
curve among young adult smokers cannot continue
unabated, there is no apparent reason to expect it
to level off in the near future.
2) Based upon cur'rent figures, RJR will continue to lose,
share points due to the aging process. 3) The increasing share trend of Newport may result in .
Newport, rather than Kool, becoming the primary compe-
titor of SALEM.
6 One factor which may.mitigate the success P. Morris currently
enjoys from aging is the projected growth of the over 50
population. As this age group becomes a larger segment of
the population, P. Morris' underdevelopment in this group
may begin to be reflected in their share performance.
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